THE magnet belonging to Herald that is being hunted by both Tango and Calipso, according to Ari S. Hudaya, the Managing Director of Bumi Resources, and also Bimo Budi Satriyo, is PT Dairi Prima Mineral, a subsidiary company of Herald.

Herald in fact owns shareholdings in several gold and copper mines in Australia and Aceh. However, its zinc and lead mine in the District of Silimapunggapungga, Dairi regency, North Sumatra, is the real “money mine” of Herald. “Gold and copper are still in the exploration stages. But the amounts are not large,” said Bimo. Herald has joint ownership of the Dairi project with Aneka Tambang. Herald owns 80 percent of Dairi and Aneka the rest.

According to Herald’s calculations, Dairi’s Anjing Hitam zone has 6.5 million tons of reserves of zinc and lead. While the Lae Jehe zone, which is about one and half kilometers from Anjing Hitam, has 11.3 million tons of reserves of zinc and lead. In total, the Dairi project has 20 million tons of reserves of zinc and lead.

However, things are not all going entirely Herald’s way. While the price of Herald shares continues to rise, on the other hand, the prices of zinc and lead on the London Metal Exchange are plunging. After peaking at US$4,580 per ton in November 2006, the price of zinc per ton had plummeted to US$1,777 in trading on Tuesday last week. The situation as regards lead prices is a similar one.

According to calculations made by the International Lead and Zinc Study Group, this year it is expected that there will be a zinc surplus amounting to 215,000 tons on the world market. World lead supplies will also be in surplus to the tune of 26,000 tons. This means that the price of both zinc and lead will be forced down until 2010.

Even so, the prospects for zinc and lead are not entirely negative. Increasing demand in China, India, Japan and South Korea will end up setting the prices of these two metals. The Lead and Zinc Study Group estimates that these four countries will push up demand for lead by 3.9 percent this year and zinc by 5.9 percent.

The boss of Bumi, Ari Hudaya, has stated that domestic demand for zinc and lead will continue to rise. “So, even if the trend drops, prices will remain at high levels,” added Bimo.

The price movements of zinc and lead, according to Adrian Rusmana, a mining analyst from HD Capital, will follow the price fluctuations of nickel. The World Bank estimated that nickel prices have now peaked and will continue to fall until 2015.

There is also another stumbling block for Herald. Up until now, mining licenses in the protected forests of Dairi are still not being issued. Masyhud, spokesperson for the Forestry Department, said that several matters regarding prerequisites for mining in protected forests were still being discussed. However, even though it already has a license to make use of protected forests from the Forestry Department, Herald still requires a decision through a Presidential decree. However, Ari said he did not see the matter of a license being a problem. “Up until now we have always been able to obtain licenses,” he said.

These two problems have made Adrian somewhat surprised at the enthusiasm of Aneka Tambang and Bumi Resources in their pursuit of Herald. “Perhaps Bumi has an excess of funds,” he said. For Aneka Tambang, this commodity diversification into zinc and lead is considered the wrong way to go. “Aneka should be hunting for commodities that are not sensitive to nickel prices, such as gold, copper or silver.”

Aneka Tambang itself, according to Bimo, is still looking for gold mines. This is because its main gold mine in Gunung Pongkor, Bogor, West Java, only has another seven years to run. “However, it’s difficult to get hold of gold mines when prices are high. And if prices are really high, then mine owners do not want to sell,” said Bimo. So, as well as already owning shares in Herald, the price is still within Aneka Tambang’s means.

AT the moment, both Tango and Calipso actually already own shares in Herald. Calipso controls some 19.93 percent. On July 4 this year, some members of the Herald board of directors decided to sell off their 8.67 percent share to Tango, thus bringing Tango’s total shares in Herald up to 19.39 percent from originally only 10.72 percent.

But the finish line in the tight competition between Calipso and Tango could still be a long way off. Bimo said that Tango has not yet decided if it will match Bumi with an increased offer. As regards how much Tango and Calipso will offer for the Herald shares, both Ari and Bimo are keeping quiet.

Adrian Rusmana himself sets the proper price for Herald at A$2.75 per share. Both Tango and Calipso have already offered more than Adrian’s valuation. “Even if the appraisal value of Herald is A$3.51, it’s not certain that we would be prepared to pay this much,” said Bimo.

The changes to the Aneka Tambang board of directors at the end of this June, according to him, could also influence its “appetite” for Herald. This Tuesday, July 15, perhaps there will be news about this appetite.